South Korea's lithium battery industry
As one of the leaders in the development of global lithium battery technology, South Korea has built a complete battery industry ecosystem with the three giants LG Energy Solution, Samsung SDI and SK On. This article comprehensively analyzes the development status, market opportunities and challenges of South Korea's lithium battery industry. First, it outlines South Korea's leading position in the global lithium battery market and the competitiveness of its core enterprises, and then deeply explores its technical advantages and market performance in the two major application areas of electric vehicles and energy storage systems. The article will analyze in detail the multiple challenges facing South Korea's lithium battery industry, including fierce competition from Chinese manufacturers, raw material supply security issues and environmental sustainability issues. In terms of innovation, this article focuses on South Korea's breakthroughs in cutting-edge technologies such as solid-state batteries and large cylindrical batteries, as well as how government policies and financial support systems promote industrial upgrading. Finally, based on the current situation, strategic suggestions are put forward for the future development path of South Korea's lithium battery industry, providing valuable reference for understanding the global lithium battery industry landscape.
1. Overview of South Korea's lithium battery industry: global market position and core enterprises
After more than 20 years of development, South Korea's lithium battery industry has established a pivotal position in the global energy storage field. As one of the earliest countries in the world to develop the lithium battery industry, South Korea has cultivated three major battery giants, LG Energy Solution, Samsung SDI and SK On, with the forward-looking industrial policies of the government and the continuous technological innovation of enterprises, forming a complete industrial chain ecosystem. According to the latest statistics, despite the fierce competition from Chinese manufacturers, the three major battery companies in South Korea still have a global market share of 49% outside the Chinese market, showing strong international competitiveness. This achievement is inseparable from the long-term investment of the South Korean government and enterprises in the lithium battery technology route, making South Korea an important hub connecting the battery technology of China and Japan with the market demand of Europe and the United States.
The technical advantages of the Korean lithium battery industry are mainly reflected in the research and development and production of high-energy-density batteries. Korean companies have long focused on the ternary lithium battery (NCM/NCA) technology route, and have accumulated deep technical patents in core areas such as the optimization of the ratio of positive electrode materials such as nickel-cobalt-manganese-aluminum, the application of silicon-carbon negative electrodes, and the battery management system (BMS). Taking LG Energy Solution as an example, the energy density of the NCMA (nickel-cobalt-manganese-aluminum) quaternary lithium battery it developed has reached more than 300Wh/kg, providing a longer range solution for electric vehicles around the world. At the same time, Samsung SDI's breakthrough in the fifth-generation cylindrical battery technology has increased the single energy density of its 21700 model battery to 720Wh/L, which is at the industry-leading level. These technological innovations not only meet the needs of high-end electric vehicle brands, but also win long-term orders for Korean battery companies from world-renowned automakers including Tesla, GM, Ford, Hyundai, etc.
From the perspective of the market structure, the Korean lithium battery industry is highly concentrated. LG Energy Solution, Samsung SDI and SK On together constitute the core force of the Korean lithium battery industry, and each company has its own unique market positioning and technical expertise. As the world's second largest battery manufacturer (second only to China's CATL), LG Energy Solution will have a power battery installed capacity of 91.4GWh in 2024, with a market share of 11.6%. The company is particularly good at soft-pack battery technology, and its products are known for their high energy density and flexible shape design, and are widely used in the high-end electric vehicle market in Europe and the United States. Samsung SDI focuses on square battery and cylindrical battery technology, with an installed capacity of 28.9GWh in 2024 and a market share of 3.7%. Although SK On is relatively small in scale (35.3GWh installed in 2024, 4.5% market share), its breakthrough in fast-charging battery technology has made it a major supplier of models such as Hyundai IONIQ.
The global layout strategy of South Korea's lithium battery industry is also worthy of attention. Faced with the rapid growth of the global electric vehicle market, South Korean battery companies have adopted an active overseas expansion strategy, especially establishing large-scale production bases in Europe and the United States. The Ultium Cells factory jointly established by LG Energy Solution and General Motors in Ohio, USA, has been put into operation with an annual production capacity of more than 30GWh; Samsung SDI has established one of the largest battery factories in Europe in Hungary, mainly supplying European car companies such as BMW and Volkswagen; SK On has built multiple production bases in the United States through its joint venture BlueOval SK with Ford Motor. This localized production strategy not only helps Korean companies circumvent trade barriers, but also shortens the supply chain and improves market response speed.
However, since 2024, the Korean lithium battery industry has faced significant market challenges. Affected by the weak demand for electric vehicles in Europe and the United States, the three major battery companies in South Korea suffered a combined operating loss of 841.6 billion won (about 4.2 billion yuan) in the fourth quarter of 2024, of which Samsung SDI lost 256.7 billion won in a single quarter, LG Energy Solution and SK On lost 225.5 billion won and 359.4 billion won respectively. At the same time, the global market share of South Korean companies has fallen from 31.7% at its peak in 2021 to below 20% in 2024, reflecting the intensification of market competition and the pressure of transformation. This situation is partly due to the slowdown in the global electric vehicle market, and is also related to the relative lag of South Korean companies in the technology route of lithium iron phosphate (LFP) batteries.
Industrial chain integration is another notable feature of South Korea's lithium battery industry. The South Korean government is aware of the importance of raw material supply security and has vigorously promoted the construction of a complete industrial chain from minerals to recycling in recent years. At the end of 2023, the South Korean government announced that it would provide 38 trillion won (about 206.7 billion yuan) of policy financing to the lithium battery industry in the next five years and set up a 1 trillion won lithium battery industry revitalization fund. These funds will be used to support the reserve of key minerals, the development of recycling technologies and the development of overseas resources, with the goal of reducing dependence on raw materials from countries such as China. For example, the South Korean government plans to invest 240 billion won in the construction of a key mineral storage base to increase the reserves of raw materials such as lithium and cobalt, and provide 250 billion won to support companies in refining these raw materials.
Overall, the Korean lithium battery industry still maintains an important position in the global market with its technological accumulation, global layout and government support. However, with the rise of Chinese manufacturers and the diversification of global technology routes, Korean companies are facing a critical period of transformation and need to accelerate technological innovation and cost control while maintaining their advantages in the high-end market to cope with increasingly fierce global competition.
2. Market opportunities: Leading advantages in electric vehicles and energy storage
The Korean lithium battery industry has demonstrated strong technical strength and market penetration in the two major application areas of electric vehicles and energy storage systems. As the global energy transition accelerates, the scale of the electric vehicle market continues to expand, and the demand for energy storage is growing rapidly, providing Korean battery companies with broad development space. With their innovative advantages in high-energy-density batteries, fast-charging technology, and system integration, Korean companies have established a solid customer base in the high-end electric vehicle market, while continuously expanding their business boundaries in the fields of grid-level energy storage and home energy storage.
Electric vehicle market performance: Korean battery manufacturers have long been core suppliers of world-renowned electric vehicle brands. LG Energy Solution provides batteries for a number of best-selling electric models such as Tesla Model Y, GM Bolt, and Hyundai Kona; Samsung SDI's battery products are widely used in European high-end electric vehicles such as the BMW i series and Volkswagen ID series; SK On focuses on Korean local models such as Hyundai IONIQ 5 and Kia EV6, as well as American electric pickups such as Ford F-150 Lightning. This diversified customer structure has enabled Korean companies to gain a stable market share in the global electric vehicle market. It is worth noting that Korean battery companies have performed particularly well in the North American market. Benefiting from the tax incentives of the Inflation Reduction Act (IRA), Korean companies' battery production capacity in the United States has continued to expand. In 2024, LG Energy Solution alone received hundreds of millions of dollars in US tax credits, significantly alleviating its profit pressure.
Technological innovation: The lithium battery research team of Daegu Gyeongbuk Institute of Science and Technology (DGIST) in South Korea has made a major breakthrough and successfully developed an innovative lithium metal battery with a "three-layer solid polymer electrolyte" structure. The battery can not only extinguish fire by itself when it catches fire, but also maintain up to 87% of its power after 1,000 cycles of charging, with a range of more than 400 kilometers. This "sandwich structure" battery is designed with a soft outer layer and a solid middle layer. The outer layer ensures good contact with the electrode, and the middle layer improves the structural integrity of the battery. To improve safety, the research team added flame retardants (decabromodiphenylethane), high-concentration lithium salts and zeolites to the electrolyte to further enhance the overall strength of the battery. When the battery detects abnormally high temperatures or flames, the built-in fire extinguishing materials will be released immediately to form a protective layer to isolate oxygen and reduce the temperature, thereby effectively curbing the spread of the fire. This innovative design solves the safety hazard of thermal runaway of traditional lithium batteries and provides a more reliable power solution for electric vehicles.
4680 large cylindrical battery technology: At the Battery Energy Storage Exhibition held in Seoul, South Korea in 2025, the three major battery companies in South Korea all demonstrated their latest achievements in the field of 46 series cylindrical batteries. This large cylindrical battery has significantly improved energy density, output power and production efficiency, and is regarded as an important technical route for the next generation of power batteries. Samsung SDI has made particularly rapid progress in this field. Its 4680 battery adopts an innovative pole-free ear design, which reduces internal resistance and improves fast charging performance. At the same time, the energy density is increased by more than 20% through structural optimization. LG Energy Solution has developed a new silicon negative electrode material for 4680 batteries, which further improves cycle life and low-temperature performance. Industry analysts predict that by 2027, 4680 batteries will account for about 15% of the global power battery market, and Korean companies are expected to gain a first-mover advantage in this emerging field.
Energy Storage System (ESS) Market: South Korea's lithium battery industry has also performed well. As the political and economic center of South Korea, Seoul's battery energy storage market has experienced significant growth in recent years, mainly due to government policy support and technological progress. In its fifth renewable energy plan, the South Korean government pledged to deploy 84.4 GW of renewable energy by 2034, a goal that has greatly promoted the development of battery energy storage technology. South Korea's grid-scale battery energy storage market revenue has grown rapidly from US$205.1 million in 2020 to US$1,140.2 million by 2028, with an average annual growth rate of 23.9%. LG Energy Solution and Samsung SDI are among the world's largest suppliers of energy storage batteries, and their products are widely used in frequency regulation, peak load shedding and renewable energy grid connection. In the US energy storage market in particular, Korean companies have occupied a considerable market share with their mature product performance and reliable safety record.
Residential energy storage system: Korean companies have also made significant progress. With the South Korean government's launch of the "Renewable Energy 3020" plan (renewable energy accounts for 20% by 2030), more and more households are installing solar photovoltaic systems and equipped with energy storage batteries. Samsung SDI's RESU series and LG Energy Solution's RESU Prime series energy storage systems are popular with home users due to their high efficiency and compact design. These residential energy storage systems are usually integrated with solar inverters to achieve home energy self-sufficiency, reduce electricity bills, and provide emergency power when the grid is out of power. The South Korean government has encouraged the installation of home energy storage systems through subsidies and tax incentives, further expanding the market capacity.
Solid-state battery technology: South Korean battery companies are actively developing solid-state battery technology and regard it as a breakthrough for the next generation of power batteries. Samsung SDI has established a full solid-state battery production line in South Korea and plans to achieve commercial production by 2027. Its prototype solid-state battery uses sulfide electrolyte and metal lithium negative electrode, and the energy density is expected to reach 900Wh/L, far exceeding the existing liquid lithium battery. LG Energy Solution is working with research institutions such as the University of California, San Diego to develop solid-state battery technology based on oxide electrolytes, focusing on solving technical problems such as interface impedance and cycle life. Although the mass production of solid-state batteries still faces many challenges, the investment of South Korean companies in this cutting-edge field has laid a technical foundation for their future market competition.
Battery recycling and reuse: As early electric vehicle batteries have entered the phase-out period, battery recycling business has gradually become a new growth point. The South Korean government has launched a new battery recycling plan, including a series of legal, system and infrastructure projects to support the development of the used battery industry. LG Energy Solution has cooperated with local Korean companies to establish a battery recycling plant, using a combination of pyrometallurgical and hydrometallurgical technology routes, with a recycling rate of more than 95% for key metals such as lithium, cobalt and nickel. These recycled materials re-enter the battery production cycle, which not only reduces production costs, but also reduces dependence on external mineral resources and enhances supply chain security.
The market opportunities of the Korean lithium battery industry in the two major fields of electric vehicles and energy storage systems come not only from the products and technologies themselves, but also from the general trend of global energy transformation. As countries strengthen carbon emission controls and promote electrification transformation, demand for high-end batteries will continue to grow. Korean companies are consolidating their position in the high-end market through technological innovation and global production layout, while actively exploring emerging application areas such as electric vertical take-off and landing aircraft (eVTOL) to create more growth points for future development.
3. Challenges: Competition, environment and innovation pressure
Although the Korean lithium battery industry occupies an important position in the global market, it has faced multiple challenges in recent years. These challenges come from changes in the market competition pattern, increasingly prominent environmental problems and the pressure of continuous innovation. Since 2024, the three major battery companies in South Korea (LG Energy Solution, Samsung SDI and SK On) have generally encountered operating difficulties, with a total operating loss of 841.6 billion won (about 4.2 billion yuan), reflecting the overall downward pressure on the industry. These challenges not only threaten the short-term profitability of the Korean battery industry, but also pose a severe test to its long-term market position.
The rise of Chinese battery manufacturers: According to data released by SNE Research, a Korean research institution, from January to November 2024, the global market share of the three major battery companies in South Korea continued to decline, from 31.7% at its peak in 2021 to below 20%. At the same time, the share of Chinese manufacturers in the list continued to increase, with a total of six companies ranked among the top ten in the world, with a total market share of 65.5%, more than three times the total market share of Korean companies. This increase and decrease in market share is mainly due to the technological breakthroughs and cost advantages of Chinese manufacturers in the field of lithium iron phosphate (LFP) batteries. In the past few years, lithium iron phosphate batteries have been no less inferior to ternary lithium batteries in terms of energy density, power and other indicators, and have solved some winter "power loss" problems, and also support 4C supercharging. However, Korean companies have made slow progress in the transformation of lithium iron phosphate batteries and over-rely on the ternary lithium battery technology route, resulting in missed opportunities in the mid- and low-end markets.
Insufficient cost competitiveness: Due to the use of relatively expensive metals such as nickel and cobalt, the material cost of ternary lithium batteries is significantly higher than that of lithium iron phosphate batteries. As competition in the global new energy vehicle industry intensifies, automakers are facing huge pressure to reduce costs and naturally tend to adopt lithium iron phosphate batteries with more cost advantages. Although Korean battery companies have made progress in high-nickel and low-cobalt battery technology, the overall cost is still difficult to match that of Chinese manufacturers. This cost gap was particularly evident in 2024, when the price of lithium carbonate fell below 80,000 yuan per ton. Chinese manufacturers were able to further reduce prices with vertically integrated supply chains and economies of scale, while Korean companies were in a passive position due to their heavy reliance on imported raw materials.
Weak demand in the European and American markets: Europe and North America are the core markets for Korean power battery companies, but according to data from the European Automobile Manufacturers Association (ACEA), the sales of pure electric vehicles in the EU market reached 1.442 million in 2024, a year-on-year decrease of 5.9%. The sales of electric vehicles in the United States in 2024 increased by 7.3% year-on-year, far below the global average. Major customers of Korean battery companies such as Tesla and General Motors have lowered their electric vehicle sales targets, postponed or cut electrification investment plans, and directly affected the order volume and capacity utilization of Korean battery companies. Data show that in the third quarter of 2024, the average utilization rate of LG's new energy battery factory was only 60%, a significant decrease from 73% in the same period last year; SK On's capacity utilization rate has dropped significantly from 95% in 2023 to 46%. Low capacity utilization has led to an increase in fixed cost allocation, further worsening the profitability of Korean companies.
Battery safety and environmental pollution issues: In August 2024, an electric car equipped with a battery from China's Farasis Energy Technology caught fire in an underground parking lot in Incheon, South Korea, causing 23 residents to be hospitalized and 140 cars to be burned or damaged. The accident triggered widespread public concern in South Korea about the safety of electric vehicles, and some apartment buildings even banned electric vehicles from entering underground parking lots. Although the accident involved Chinese batteries, South Korean domestic batteries also face similar safety hazards. The South Korean government subsequently introduced new regulations requiring automakers to disclose brand information of all electric vehicle batteries and launch a battery certification program in advance. These safety incidents and increased supervision have increased the compliance costs of battery companies and also affected consumers' overall confidence in electric vehicles.
Battery recycling and waste disposal: As early electric vehicle batteries have reached the end of their service life, how to deal with these waste batteries has become a severe challenge. Although the South Korean government plans to establish a comprehensive management information system for power batteries from production to recycling, and set up an expert group to formulate detailed measures, the actual recycling system is still imperfect. If the heavy metals and toxic chemicals contained in lithium batteries are not handled properly, they may cause long-term pollution to soil and water sources. As a country with limited land area, South Korea has a particularly prominent problem of insufficient waste treatment sites. At the same time, the research and development of battery recycling technology and the construction of recycling facilities require a lot of investment, which also increases the operating burden of enterprises.
Raw material supply security: South Korea has a serious supply gap in key metal reserves, and core battery materials such as cobalt, lithium, and nickel are highly dependent on imports, especially from China, the Democratic Republic of the Congo, Indonesia and other countries. This external dependence makes the Korean battery industry vulnerable to geopolitical risks and fluctuations in raw material prices. The global supply chain crisis in 2022-2023 has exposed this vulnerability, when the soaring lithium prices severely squeezed the profit margins of Korean battery companies. Although the South Korean government plans to invest 240 billion won in the construction of key mineral storage bases and encourage companies to invest in overseas mineral resource development, it will still take a long time to establish a complete and independent supply chain, and it will be difficult to fundamentally solve the problem of raw material security in the short term.
Strategic dilemma of technology route selection: At present, Korean companies are facing a strategic choice of whether to continue to focus on high-end ternary lithium batteries or turn to more cost-effective lithium iron phosphate batteries. The former can maintain technological leadership but has limited market space, while the latter faces direct price competition with Chinese manufacturers. At the same time, global battery technology is in a period of rapid iteration, and emerging technology routes such as solid-state batteries, sodium-ion batteries, and lithium metal batteries continue to emerge, making technology investment decisions more complicated. Although the "sandwich" safe solid-state battery developed by Daegu Gyeongbuk Institute of Science and Technology (DGIST) in South Korea has shown good safety performance and cycle life, it is still a long way from large-scale commercial production. In the case of uncertainty in technology routes, how Korean companies balance short-term market needs and long-term technology layout has become an important challenge facing management.
Talent competition: With the rapid development of the global battery industry, high-quality R&D personnel and engineers have become scarce resources. Korean companies not only need to compete with Chinese manufacturers for market share, but also need to compete with American and European technology companies for top talents. Especially in key areas such as artificial intelligence, materials science, and battery management systems, the competition for talent is becoming increasingly fierce. Although South Korea has a good engineering education system, the global competitive environment still places higher demands on the talent strategy of enterprises.
Faced with these multi-dimensional challenges, the Korean lithium battery industry is in a critical period of transformation. Traditional development models and competitive advantages are being re-evaluated, and companies need to make strategic adjustments in terms of technology routes, market positioning, supply chain management, and other aspects. How to maintain the technological advantages in the high-end market while enhancing cost competitiveness and ensuring supply chain security has become a key factor in determining the future status of the Korean battery industry. At the same time, these challenges also provide opportunities for industrial upgrading, driving Korean companies to accelerate technological innovation and business model changes to adapt to the rapidly changing global battery market landscape.
4. Technological innovation: solid-state batteries and other cutting-edge breakthroughs
Faced with increasingly fierce global competition and diversified market demands, the Korean lithium battery industry is taking technological innovation as a core strategy to break through development bottlenecks. While consolidating the existing advantages of liquid lithium battery technology, Korean companies and research institutions are actively deploying cutting-edge technologies such as solid-state batteries, large cylindrical batteries, and high-nickel systems, and maintaining their leading position in the field of global battery technology through comprehensive upgrades in material innovation, structural design, and manufacturing processes. These technological innovations are not only related to the competitiveness of the Korean battery industry, but will also have a profound impact on the future development of the global energy storage industry.
Solid-state battery technology: Regarded as the "holy grail" of the next generation of power batteries, South Korea has invested a lot of R&D resources in this field. Compared with traditional liquid lithium batteries, solid-state batteries use solid electrolytes instead of liquid electrolytes, and have two outstanding advantages: higher energy density and intrinsic safety. Samsung SDI has established a full solid-state battery production line in South Korea and plans to achieve commercial production by 2027. Its prototype solid-state battery uses sulfide electrolytes and metal lithium anodes, and the single-cell energy density is expected to reach 900Wh/L, almost twice that of existing high-end liquid lithium batteries. LG Energy Solution has chosen the oxide electrolyte technology route, and cooperated with well-known research institutions such as the University of California, San Diego, to focus on solving the technical problem of large impedance between the electrode and the electrolyte interface. It is worth noting that the lithium battery research team of Daegu Gyeongbuk Institute of Science and Technology (DGIST) in South Korea has made important breakthroughs in the safety of solid-state batteries and developed an innovative lithium metal battery with a "three-layer solid polymer electrolyte" structure. This "sandwich structure" battery adds flame retardants (decabromodiphenylethane), high-concentration lithium salts and zeolites to the electrolyte. When abnormally high temperatures or flames are detected, the built-in fire extinguishing materials will be released immediately to form a protective layer to isolate oxygen and reduce the temperature, thereby effectively curbing the spread of fire. This self-extinguishing design solves the safety hazards faced in the industrialization process of solid-state batteries and provides possibilities for early market applications.
Large cylindrical battery technology: Especially the 4680 model (diameter 46mm, height 80mm), has become another key area of technological innovation for Korean battery companies. At the Battery Energy Storage Exhibition held in Seoul, South Korea in 2025, the three major Korean battery companies all displayed their latest achievements in the field of 46 series cylindrical batteries. This large-size cylindrical battery has many advantages over traditional small cylindrical batteries: higher production efficiency, by increasing the size of the single battery to reduce the number of cells in the battery pack, simplifying the difficulty of integration; better heat dissipation performance, the cylindrical structure provides a larger surface area to volume ratio, which is conducive to thermal management; lower cost, the standardized large cylindrical design can achieve large-scale production benefits. Samsung SDI has made leading progress in this field. Its 4680 battery adopts an innovative pole-free ear (also known as full-pole ear) design. The conductive foil is directly connected to the battery shell through laser welding technology, which greatly reduces the internal resistance and improves the fast charging performance. Test data shows that Samsung SDI's 4680 battery can be charged to 80% in 15 minutes, and the energy density is increased by more than 20% through structural optimization. LG Energy Solution has developed a new silicon negative electrode material suitable for 4680 batteries. Through the composite structure of nano-silicon and graphite, the volume expansion problem of silicon materials during charging and discharging is alleviated, thereby improving the cycle life and low-temperature performance. Industry analysts predict that by 2027, 4680 batteries will account for about 15% of the global power battery market, mainly used in high-end electric vehicles and energy storage systems.
High-nickel, low-cobalt cathode materials: Korean companies have made significant progress in reducing battery costs while maintaining high energy density. The NCMA (nickel-cobalt-manganese-aluminum) quaternary cathode material developed by LG Energy Solution increases the nickel content to more than 90% and reduces the cobalt content to less than 5%, which not only reduces the material cost, but also increases the energy density to more than 300Wh/kg. SK On focuses on the industrial application of high-nickel NCM9½½ (nickel content 90%, cobalt and manganese each 5%) materials, and significantly improves the cycle stability and thermal safety of high-nickel materials through special surface coating technology and gradient concentration design. These innovations enable Korean companies to maintain their technological advantages in the high-end electric vehicle market and provide ideal battery solutions for high-performance car brands such as Mercedes-Benz and BMW. It is worth noting that Korean companies have also conducted in-depth research on high-voltage electrolytes and new additives, and developed an electrolyte system that can withstand an operating voltage of more than 4.5V, laying the foundation for the next step of improving battery energy density.
Silicon-based negative electrode materials: The theoretical specific capacity of traditional graphite negative electrodes is only 372mAh/g, while the theoretical specific capacity of silicon materials is as high as 4200mAh/g, making them a highly promising next-generation negative electrode material. However, silicon materials have a volume expansion of about 300% during the charging and discharging process, which leads to problems such as electrode structure damage and short cycle life. Samsung SDI has effectively alleviated the volume expansion effect by developing silicon-carbon composite materials and porous silicon structures, and increased the cycle life of its silicon-based negative electrode to more than 1,000 times. LG Energy Solution uses silicon oxide (SiOx) materials. Although the specific capacity is slightly lower than that of pure silicon, the volume expansion rate is greatly reduced to about 150%, which is more suitable for commercial applications. These innovations have enabled silicon-based negative electrodes to move from laboratories to mass production and gradually be applied to high-end electric vehicle batteries. According to industry estimates, by 2026, about 15% of electric vehicle batteries worldwide will use silicon-containing negative electrodes, and Korean companies are expected to take the lead in this emerging market.
Battery manufacturing process: As battery size increases and performance requirements increase, traditional manufacturing methods face the dual challenges of precision and efficiency. Korean equipment manufacturer Han's Lithium Battery showcased its "new energy battery intelligent manufacturing overall solution" based on the entire battery manufacturing process at the 2025 Korea Battery Exhibition. The solution integrates core technologies such as high-precision laser die-cutting, high-speed stacking/winding, fully automatic assembly and AI quality inspection system, automatic intelligent pairing and efficient module assembly, which is said to increase production efficiency by more than 30%. It is particularly noteworthy that Han's Lithium Battery has launched a number of solid-state battery-specific manufacturing equipment, such as battery cell ultrasonic welding machines, shell top and side sealing machines, Degas machines, and chemical component capacity equipment, which provide strong process support for the mass production and installation of next-generation high-energy density solid-state batteries. These advanced manufacturing technologies not only improve product quality and consistency, but also reduce production costs, enhancing the overall competitiveness of the Korean battery industry.
Battery Management System (BMS) and Thermal Management Technology: Modern electric vehicle battery packs are usually composed of hundreds or even thousands of cells. How to ensure that these cells are kept in optimal condition when working is a key factor affecting battery performance and safety. Korean companies have accumulated rich experience in BMS algorithms and thermal management design, and have developed intelligent management systems that can monitor the status of each battery cell in real time, accurately estimate the remaining power (SOC) and health state (SOH). SK On's "triple protection system" can provide early warning before abnormal conditions occur through three-dimensional monitoring of voltage, temperature and current, effectively preventing thermal runaway. LG Energy Solution has developed an artificial intelligence-based predictive maintenance system that predicts possible failure points by analyzing historical data and intervenes in advance. These innovations have enabled Korean battery products to maintain a competitive advantage in safety and reliability.
Battery recycling technology: As early electric vehicle batteries enter the phase of elimination, efficient and environmentally friendly recycling technology has become increasingly important. The South Korean government has launched a new battery recycling plan, including a series of legal, system and infrastructure projects to support the development of the used battery industry. LG Energy Solution has cooperated with local Korean companies to establish a battery recycling plant, using a technical route combining pyrometallurgy and hydrometallurgy, with a recycling rate of more than 95% for key metals such as lithium, cobalt and nickel. It is particularly worth mentioning that the direct recycling technology developed by Korean companies can directly recycle positive electrode materials, avoiding the high-energy smelting process in the traditional recycling process, and greatly reducing carbon emissions and energy consumption. These recycling technologies not only have environmental benefits, but also enhance the resource security of the Korean battery industry and reduce dependence on imported raw materials.
Diversified technical routes: In addition to mainstream lithium-ion batteries, Korean research institutions and companies are also exploring alternative technical routes such as lithium metal batteries, lithium-sulfur batteries, and sodium-ion batteries. As mentioned earlier, the innovative lithium metal battery developed by Daegu Gyeongbuk Institute of Science and Technology (DGIST) in South Korea has achieved a performance indicator of maintaining up to 87% of the power after 1,000 cycles of charging and a range of more than 400 kilometers. The Korea Advanced Institute of Science and Technology (KAIST) has made a breakthrough in the field of lithium-sulfur batteries. Through the design of three-dimensional graphene carrier materials and multifunctional diaphragms, it has solved the problems of polysulfide shuttle effect and poor sulfur conductivity, and increased the cycle life of lithium-sulfur batteries to more than 500 times. Although these alternative technologies are unlikely to replace lithium-ion batteries in the short term, they represent possible directions for future energy storage, and South Korea's early layout in these areas has laid the foundation for its long-term technological competitiveness.
The technological innovation ecosystem of South Korea's lithium battery industry is jointly composed of the government, enterprises and research institutions, forming a complete chain from basic research to industrialization. The South Korean government has included lithium battery patents in the priority review fast track, shortening the review cycle from 21 months to 10 months, accelerating the commercial application of technological achievements. At the same time, the government supports corporate innovation through policy financing and R&D subsidies, such as providing 38 trillion won (about 206.7 billion yuan) of policy financing to the lithium battery industry in the next five years. This all-round support system provides a strong impetus for South Korea's lithium battery technology innovation, enabling it to maintain its leading position in the fierce global competition.
Overall, the Korean lithium battery industry is responding to market challenges through multi-path technological innovation. While maintaining the existing advantages of liquid lithium battery technology, it is actively deploying cutting-edge fields such as solid-state batteries; while improving energy density, it does not relax the optimization of safety and cost; while meeting current market demand, it is preparing for future technological changes. This comprehensive and balanced innovation strategy enables Korean companies to remain competitive in the rapidly changing global battery market and make important contributions to the global energy transition.
5. Government support and policy promotion: building an industrial ecosystem
The rapid development and global competitiveness of South Korea's lithium battery industry are largely due to the government's visionary policy support and systematic industrial planning. Faced with the historic opportunity of global energy transformation and increasingly fierce international competition, the South Korean government has created a good development environment for the lithium battery industry through multi-dimensional policy tools such as financial support, R&D investment, industrial chain construction and international market development. These policies not only help Korean companies gain advantages in technology research and development and market expansion, but also build a complete battery industry ecosystem from raw materials to recycling for the entire country, enhancing the long-term competitiveness of the industry.
Financial support: In December 2023, the Ministry of Finance of South Korea announced that it would provide 38 trillion won (about 206.7 billion yuan) of policy financing to the lithium battery industry in the next five years, which will be officially implemented from 2024. This huge amount of funds is provided to enterprises in the form of low-interest loans, guarantees and investments through policy financial institutions such as the Korea Development Bank, focusing on supporting technology research and development, capacity expansion and overseas market development. More importantly, South Korea has also set up a 1 trillion won lithium battery industry revitalization fund to focus on cultivating new growth points and technological innovation in the battery industry. This large-scale, long-term financial support provides a solid financial foundation for Korean lithium battery companies, enabling them to make strategic layouts and technological investments in the global market. In fact, this is not the first time that the South Korean government has strongly supported the battery industry. As early as November 2022, the South Korean government joined hands with LG New Energy, Samsung SDI, SK On and other lithium battery companies to jointly establish a battery alliance, planning to invest 50 trillion won (about 255.55 billion yuan) to lay out the battery industry chain. Most of these funds have flowed to the research and development of key technologies and the construction of overseas production bases, helping Korean companies occupy a favorable position in the global battery market.
R&D investment: The South Korean government deeply understands that technological innovation is the core of industrial competitiveness, so it pays special attention to supporting basic research and applied research and development. Of the 38 trillion won in policy financing, 73.6 billion won is specifically used for the research and development of lithium battery-related technologies. These R&D funds are mainly invested in several key areas: first, next-generation battery technology such as solid-state batteries; second, localization of battery materials and recycling technology; third, upgrading of manufacturing processes and equipment. In order to accelerate the transformation of technological achievements, the South Korean government has also included lithium battery patents in the priority review fast track, increased the number of professional reviewers, and significantly shortened the lithium battery patent review cycle from 21 months to 10 months. This measure has significantly accelerated the commercialization process of corporate technological innovation, enabling Korean companies to transform R&D results into market advantages more quickly. In terms of talent training, top universities such as the Korea Advanced Institute of Science and Technology (KAIST) and Seoul National University have established special battery research projects, and have worked closely with the industry to cultivate high-quality R&D talents, providing a steady stream of human resources for industrial innovation.
Supply chain security: South Korea's key minerals such as lithium, cobalt, and nickel required for lithium battery manufacturing are highly dependent on imports. This external dependence exposes the industry to potential supply risks. In order to reduce its dependence on key minerals from China and several other countries, the South Korean government has implemented a number of measures. On the one hand, the government directly invested 240 billion won to build a key mineral storage base to increase the strategic reserves of lithium, cobalt and other lithium battery raw materials; on the other hand, it provided 250 billion won in funds to support enterprises to refine these raw materials and improve processing capabilities. At the same time, the South Korean government provides tax incentives and loan support to enterprises that invest in overseas resource development to encourage enterprises to participate in global mineral resource development. According to Yonhap News Agency, if domestic lithium batteries are reused, South Korea expects to ensure enough key minerals for 170,000 electric vehicles each year. To this end, the South Korean government has established a comprehensive management information system for power batteries from production to recycling, improved supply chain transparency, and established an expert group to formulate detailed resource security measures. These multi-pronged policies have significantly enhanced the supply chain resilience of South Korea's lithium battery industry and reduced the risk of supply disruptions caused by geopolitical factors.
Recycling system construction: As early electric vehicle batteries have entered the phase of elimination, battery recycling has become a key link in the sustainable development of the industry. The South Korean government recently launched a new battery recycling plan, including a series of legal, system and infrastructure projects to support the development of the used battery industry. The core of this plan is to establish an "Extended Producer Responsibility" (EPR) system, which requires battery manufacturers to be responsible for the full life cycle management of their products, including recycling and disposal. At the same time, the government provides financial and technical support to help companies establish recycling networks and processing facilities. South Korea has also formulated strict environmental standards to ensure that the recycling process meets environmental protection requirements. It is worth noting that the battery recycling system promoted by the South Korean government not only focuses on environmental benefits, but also attaches importance to economic value. By efficiently recycling valuable metal materials such as lithium, cobalt, and nickel, it not only reduces dependence on primary minerals, but also creates new business opportunities. The government estimates that a sound recycling system can save South Korea hundreds of millions of dollars in raw material import costs each year.
Safety supervision: In recent years, a number of electric vehicle and energy storage system fire accidents have aroused public concern about battery safety. In response, the South Korean government has strengthened the battery safety supervision system and introduced a series of new policies and standards. In 2024, the South Korean government and the ruling People's Power Party (PPP) decided to introduce a new system requiring automakers to disclose brand information of all electric vehicle (EV) batteries to improve transparency. At the same time, the government launched a battery certification program in advance, requiring automakers to obtain government certification for their electric vehicle batteries to ensure safety. For energy storage systems (ESS), the South Korean government has amended the law to force battery suppliers to install ground fault detectors, fire extinguishing systems, and pressure relief devices. These measures are designed to prevent fires in batteries in the event of thermal runaway and improve the overall safety of ESS. Although stricter regulation increases the compliance costs of companies, it will help enhance consumer confidence and promote healthy market development in the long run. The South Korean government also supports companies and research institutions to develop safer battery technologies, such as the "self-extinguishing" battery developed by DGIST mentioned above, which fundamentally improves safety through technological innovation.
Market cultivation: The South Korean government has taken a variety of measures to stimulate domestic demand for electric vehicles and energy storage systems and create market space for local battery companies. In the field of electric vehicles, the government provides car purchase subsidies and tax incentives, builds charging infrastructure, and promotes the electrification of public fleets. At the opening ceremony of the "2025 Battery Energy Storage Exhibition", South Korean Minister of Trade, Industry and Energy Ahn Deok-geun made it clear that "the South Korean government will actively boost demand for electric vehicles and provide support for the development of the battery industry." In the field of energy storage, the South Korean government has pledged in its fifth renewable energy plan to deploy 84.4 GW of renewable energy by 2034, an ambitious goal that will greatly boost the demand for battery energy storage systems. The government has also revised the Electricity Act to simplify the licensing procedures for small-scale power brokerage and electric vehicle charging businesses, enabling more companies to participate in the battery energy storage market. These market cultivation policies not only provide stable local market demand for Korean battery companies, but also provide a foundation and springboard for their international expansion.
International cooperation: The South Korean government actively promotes international cooperation in the lithium battery industry and creates a favorable international environment for companies through bilateral and multilateral channels. On the one hand, South Korea has signed a number of trade and investment agreements with major markets such as the United States and the European Union to ensure that Korean battery companies can enter these markets smoothly. For example, Korean battery companies benefited from the tax credit policy of the US Inflation Reduction Act (IRA) and gained a competitive advantage in the US market. On the other hand, South Korea has strengthened cooperation with resource-rich countries such as Australia, Chile, and Indonesia to ensure a stable supply of key raw materials. South Korea also actively participates in the formulation of global battery standards and rules, striving to gain a voice in international competition. For example, the South Korean government supports domestic companies to participate in the battery standard-setting work of the International Electrotechnical Commission (IEC) and the International Organization for Standardization (ISO) to ensure that international standards take into account the technical characteristics and interests of South Korean companies.
The South Korean government's lithium battery industry policy shows systematic and forward-looking characteristics, forming a complete policy system from R&D to market, from raw materials to recycling. These policies do not exist in isolation, but cooperate and reinforce each other to jointly build an ecosystem conducive to industrial development. For example, R&D investment improves the technical level, safety supervision enhances market confidence, and market cultivation provides space for technology commercialization. This systematic policy approach enables South Korea to establish a globally competitive lithium battery industry in a relatively short period of time.
It is worth noting that the South Korean government's industrial policy is not static, but is constantly adjusted according to changes in domestic and international situations. Faced with the downward pressure on South Korea's power battery industry in 2024, the government is considering directly compensating local companies that build factories in cash. At the same time, in view of the advantages of Chinese companies in the field of lithium iron phosphate batteries, the South Korean government also encourages companies to accelerate technological transformation and develop more cost-competitive products. This flexible and adaptable policy adjustment ability enables the South Korean lithium battery industry to remain competitive in a rapidly changing market environment.
The South Korean government's support for its lithium battery industry is based on a clear strategic goal: to surpass China and become the most powerful battery country. According to the Korea Economic Daily, the South Korean government plans to achieve a 40% market share of South Korean lithium battery companies in the global power battery market by 2030. Although there are many challenges to achieving this goal, especially the strong competition from Chinese companies, the South Korean government is steadily advancing the realization of this vision through continuous policy support and strategic investment. In the long run, the development of South Korea's lithium battery industry is not only related to economic benefits, but also an important part of the country's energy security and industrial upgrading strategy. Therefore, the government's support is expected to continue or even strengthen.
6. Future Outlook and Strategic Recommendations
The Korean lithium battery industry stands at the crossroads of development. On the one hand, it has world-leading technological strength and a mature industrial system, and on the other hand, it faces multiple challenges such as changes in the market structure, transformation of technological routes and supply chain security. Based on the current status of industrial development and global trends, the Korean lithium battery industry needs to make key choices in strategic direction, and consolidate existing advantages and open up new growth points through multi-dimensional measures such as technological innovation, market diversification, industrial chain integration and sustainable development. The next five to ten years will be a critical period to determine the global status of the Korean lithium battery industry. Reasonable strategic planning will help Korean companies maintain their leading position in this important field.
Diversification of technical routes: Korean companies have long focused on the ternary lithium battery technical route. This strategy has achieved remarkable success in the past decade, allowing Korean companies to occupy an important position in the high-end electric vehicle market. However, with the rapid advancement of lithium iron phosphate battery technology and the emergence of cost advantages, the risks of a single technical route are becoming increasingly prominent. In the future, the Korean battery industry should implement a more balanced technical strategy, while maintaining the technical advantages of ternary lithium batteries, accelerating the research and development and industrialization of lithium iron phosphate batteries. This diversified strategy can help Korean companies cover a wider market range and meet the needs of different customers. Especially in the energy storage system and low-end electric vehicle market, lithium iron phosphate batteries are becoming the mainstream choice due to their cost advantages and long cycle life. Korean companies can learn from the experience of Chinese manufacturers, but should not simply imitate them. Instead, they should develop lithium iron phosphate technology with Korean characteristics, such as improving energy density and low-temperature performance through material innovation and process optimization to form differentiated competitive advantages. At the same time, Korean companies should not relax their investment in next-generation technologies such as solid-state batteries and lithium metal batteries, which may be gradually commercialized in the next five to ten years and become new industrial commanding heights.
Raw material supply security: As a country with relatively scarce resources, South Korea is highly dependent on imports of key raw materials for lithium batteries such as lithium, cobalt, and nickel. This structural weakness has been fully exposed in the fluctuations of the global supply chain in recent years. To reduce supply risks, South Korea needs to build a multi-level raw material security system. In the short term, the strategic reserves of key minerals should be further expanded, and the key mineral storage base planned by the South Korean government to invest 240 billion won should be accelerated. In the medium term, cooperation with resource-rich countries should be strengthened to establish stable supply channels through long-term supply agreements and joint investment in mines. The tax incentives and loan support policies for overseas resource development provided by the South Korean government should be further strengthened. In the long run, the battery recycling industry should be vigorously developed, "urban mines" should be established, and dependence on primary minerals should be reduced. The South Korean government estimates that a complete recycling system can ensure enough key minerals for 170,000 electric vehicles each year, and this direction deserves continued investment. In addition, South Korean companies can also explore material innovation, such as developing low-cobalt or cobalt-free battery chemistry systems, to fundamentally reduce dependence on scarce resources.
Optimization of global production layout: South Korean battery companies have established production bases in the United States, Europe and other places. This global production network helps to get close to customer markets and avoid trade barriers. However, weak demand in the European and American electric vehicle markets in 2024 led to a sharp decline in the capacity utilization of South Korean companies' overseas factories. The average utilization rate of LG's new energy battery factory was only 60%, and SK On's capacity utilization rate dropped to 46%. Faced with this situation, South Korean companies should re-evaluate their global capacity layout and adopt a more flexible investment strategy. On the one hand, they can ensure capacity digestion by establishing a closer joint venture with the OEM; on the other hand, they can consider shifting part of their capacity to energy storage battery production to cope with short-term fluctuations in the electric vehicle market. In terms of regional layout, in addition to the traditional European and American markets, we can pay appropriate attention to emerging markets such as Southeast Asia and India, where the electric vehicle industry is in its infancy and has great growth potential in the future. At the same time, South Korea should retain the production capacity of high value-added battery products, such as solid-state batteries and high-end power batteries, to maintain technological leadership and supply chain security.
Strengthen industrial collaboration: Although South Korea's lithium battery industry has three giants, LG New Energy, Samsung SDI and SK On, there is more competition than cooperation among companies, and it is difficult to form a joint force to cope with global competition. In the future, South Korea can learn from Japan's experience of the "national system" and establish a closer industrial alliance. In November 2022, the South Korean government joined hands with three major battery companies to jointly establish a battery alliance. This mechanism should be further strengthened, especially in basic research, standard setting and international market development. Small and medium-sized enterprises are also an important part of the industrial ecology. South Korea should support the development of small and medium-sized professional enterprises in sub-sectors such as battery materials, manufacturing equipment, testing and certification, and form an industrial pattern of coordinated development of large, medium and small enterprises. At the R&D level, a national battery research institute can be established to integrate the strength of enterprises, universities and research institutions to overcome common technical problems. The South Korean government's practice of shortening the patent examination period for lithium batteries from 21 months to 10 months has provided a good environment for technological innovation, and similar facilitation measures can be further expanded.
Sustainable development strategy: As the world pays more attention to environmental protection and social responsibility, the sustainable development capabilities of the battery industry will become one of the core competitive advantages. The Korean lithium battery industry should deeply integrate the concept of environmental friendliness and social responsibility into its development strategy. In terms of the environment, carbon emissions in the battery production process should be comprehensively reduced, the proportion of renewable energy use should be increased, and manufacturing processes with lower energy consumption should be developed. The battery recycling plan launched by the South Korean government should be actively responded to by enterprises, and an environmental management system covering the entire life cycle should be established. In terms of social responsibility, it should ensure that overseas mineral procurement complies with human rights and environmental standards, and avoid "conflict minerals" from entering the supply chain. At the same time, the positive impact of battery technology on society can be increased, such as supporting energy access in remote areas and participating in grid stability projects. These sustainable development initiatives are not only moral requirements, but also can create brand value and market differentiation advantages for Korean companies. Especially in markets with strict environmental standards such as Europe, sustainable development capabilities will become an important competitive factor.
Talent training and retention: Technological innovation and industrial development ultimately rely on high-quality talents. South Korea's lithium battery industry faces global competition for talent, especially in the field of battery materials, artificial intelligence, big data and other cutting-edge fields, where top talent is in short supply. To maintain its talent advantage, South Korea needs to build a more open and attractive talent system. On the one hand, local talent training should be strengthened, more battery-related majors should be established in universities and graduate schools, and the enrollment scale should be expanded; on the other hand, top international talents should be actively introduced to provide competitive working conditions and living environment for foreign experts. At the enterprise level, a more flexible and international talent management mechanism should be established to encourage innovation and interdisciplinary cooperation. The South Korean government can consider setting up a special battery talent program to support young scientists and engineers in battery research and reserve talent resources for the long-term development of the industry. At the same time, the interaction between industry and academia should be strengthened to promote knowledge flow and talent training through joint laboratories, visiting professors and other forms.
Strategies to cope with China's competition: The rapid rise of Chinese battery companies is the most direct challenge facing the South Korean industry. In 2024, the total market share of China's six battery companies will reach 65.5%, more than three times the combined market share of South Korean companies. Faced with this situation, Korean companies should not engage in a head-on price war with Chinese manufacturers, but should play to their own advantages in technological innovation and high-end markets. On the one hand, they can focus on high-end battery products with high energy density and high safety to serve customer groups such as Mercedes-Benz and BMW who pursue performance rather than price; on the other hand, they can accelerate the commercial application of new technologies, such as solid-state batteries and large cylindrical batteries, and establish competitive advantages through technological generation gaps. At the same time, Korean companies can also explore a competitive and cooperative relationship with Chinese manufacturers, cooperate in specific fields or markets, and achieve complementary advantages. For example, joint ventures can be established in the field of energy storage systems or specific raw materials to jointly develop third-party markets. The Korean government's diplomatic efforts within international trade rules and multilateral frameworks can also create a fairer competitive environment for companies.
Explore new application areas: Although electric vehicles are the largest application market for lithium batteries, they are not the only direction. The Korean lithium battery industry should actively explore emerging application scenarios for battery technology and create more growth points. Energy storage systems (ESS) are an important direction. As the proportion of renewable energy increases, grid-level energy storage demand will continue to grow. Korean companies already have a good foundation in the ESS field. LG Energy Solution and Samsung SDI are the world's leading ESS suppliers, and this advantage should be further expanded. Electric vertical take-off and landing aircraft (eVTOL) is another emerging market with great potential. Its demand for high-energy density and high-power batteries is highly consistent with the technical expertise of Korean companies. In fact, Korean battery companies have begun to deploy in this field, such as LG Energy Solution and eVTOL. In addition, professional fields such as ship electrification and heavy machinery electrification are also worthy of attention. Although these markets are small in scale, they have high technical barriers and large profit margins, which are suitable for Korean companies to exert their technological advantages. Through the diversification of application scenarios, the Korean lithium battery industry can reduce its dependence on a single market and enhance its risk resistance.
The future development of the Korean lithium battery industry cannot be separated from the collaborative efforts of the government and enterprises. The Korean government's plan to provide 38 trillion won (about 206.7 billion yuan) of policy financing to the lithium battery industry in the next five years needs to be effectively implemented, and the funds should focus on key technology research and development, support for small and medium-sized enterprises, and the construction of a recycling system. Policy support should pay more attention to market mechanisms to avoid inefficiency caused by overprotection. At the same time, the government can play a bridging role to promote collaborative innovation between the battery industry and related industries such as automobiles, energy, and electronics, and create greater system value.
Overall, although the Korean lithium battery industry faces severe challenges, it still has strong development potential with its solid technological accumulation, global layout and government support. Through the above strategic adjustments and innovative measures, Korean companies are expected to maintain their leading position in the increasingly fierce global competition and make important contributions to the global energy transformation. In the next five to ten years, the Korean lithium battery industry is likely to show a development trend of "high-end, diversified, and sustainable". While maintaining the advantages of ternary lithium batteries, it will accelerate the commercialization of next-generation technologies such as solid-state batteries, build a safer and more resilient supply chain system, and open up a diversified application market. In this process, the Korean experience will also provide valuable reference for the development of the global lithium battery industry.
